The rental market may remain undersupplied, but it is becoming increasingly competitive for landlords. The latest Zoopla Rental Market Report shows that annual rent inflation for new lets is at its lowest level in more than three years, with rents rising by just 3% over the past year – a sharp decline from 7.4% a year ago.
While demand for rental properties continues to outstrip supply, the gap is narrowing – there are now 11% more homes available for rent, while rental demand has fallen by 17%. And although there are still 12 renters competing for each available property, this is 42% lower than the peak levels of 2022-24.
At the same time, rental disputes are on the rise, with one in five disputes now centred around rental arrears – the highest level in five years. This puts emphasis on the need for landlords to be more selective when choosing tenants.
One effective way for landlords to combat the more competitive environment, guard against rental disputes and protect their investment is through property renovation. A newly refurbished, high-spec property can demand greater rental value, help attract a higher calibre of tenant, reduce void periods, and ensure a more stable rental income.
A well-maintained and modernised property stands out in a competitive rental market and landlords who invest in improvements can attract more applicants, giving them greater control over tenant selection.
Making upgrades to key areas like kitchens, bathrooms, flooring, and energy efficiency measures can increase a property’s appeal and rental value. Ensuring a property meets minimum Energy Performance Certificate (EPC) standards is not only a legal requirement but also a strong selling point for tenants looking to reduce their energy bills. Let’s not forget that these minimum requirements are also likely to be increased to an EPC rating of C or above in the coming years.
Tenants who value high-quality properties can often also be more inclined to stay longer, leading to fewer vacancies and lower turnover costs.
Renovation doesn’t have to be extensive or disruptive. Light refurbishment, which includes non-structural improvements, can be an effective way for landlords to add value without requiring planning permission or complex approvals. Redecorating with a fresh coat of paint, replacing old flooring, upgrading kitchens and bathrooms with modern fixtures, improving lighting and windows, and ensuring safety updates like rewiring or plumbing improvements are all effective ways to enhance a property’s appeal.
For landlords looking to complete renovations quickly, bridging finance offers a flexible solution. A short-term bridging loan can provide the necessary funds to carry out refurbishment before transitioning to a longer-term mortgage. If the improvements materially impact the value of the property, this could even mean refinancing at a lower LTV than might have previously been achieve.
While the rental market still faces supply shortages, increasing affordability pressures mean landlords can no longer rely on rising rents alone to sustain returns. Instead, offering well-maintained and desirable properties is becoming increasingly important. With rental disputes on the rise, particularly those related to arrears, landlords should focus on securing reliable, financially stable tenants.
Property renovation is not just an investment in the physical condition of a rental property– it’s an investment in tenant quality, long-term stability, and financial security.
